The decision by AT&T comes nine months after it announced the deal. AT&T will recognize a pretax accounting charge of $4 billion in the fourth quarter to account for its breakup fee with Deutsche Telekom. Additionally, the company said it would enter a mutually beneficial roaming agreement with Deutsche Telekom.

AT&T faced stiff opposition from the Department of Justice, which filed against the merger at the end of the summer, and the Federal Communications Commission, which was set to send the deal to an administrative law hearing. Both agencies found the combination of the nation's No. 2 and No. 4 wireless companies would stifle competition, harm consumers, and raise prices.

"Consumers won today," said Sharis Pozen, the DOJ's acting assistant attorney general for the antitrust division. "Had AT&T acquired T-Mobile, consumers in the wireless marketplace would have faced higher prices and reduced innovation. We sued to protect consumers who rely on competition in this important industry. With the parties' abandonment, we achieved that result," Pozen said in a statement.

In a statement announcing its decision, AT&T was defiant that the government should allow free markets to operate in order to meet growing demand from consumers for wireless services. "Adding capacity to meet these needs will require policy makers to do two things. First, in the near term, they should allow free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC. Second, policymakers should enact legislation to meet our nation's longer-term spectrum needs," said Randall Stephenson, AT&T's chairman and CEO.

Public interest groups, which also fought hard against the merger by marshalling consumers via petitions and online campaigns, were pleased.

"In this age of cynicism, it is important for the American people to see that Washington does not always go to the highest bidder. The Department of Justice and the Federal Communications Commission stood up to tremendous lobbying pressure as AT&T spent tens of millions of dollars trying to push this merger through," said Harold Feld, the legal director of Public Knowledge.

The decision by AT&T comes nine months after it announced the deal. AT&T will recognize a pretax accounting charge of $4 billion in the fourth quarter to account for its breakup fee with Deutsche Telekom. Additionally, the company said it would enter a mutually beneficial roaming agreement with Deutsche Telekom.

AT&T faced stiff opposition from the Department of Justice, which filed against the merger at the end of the summer, and the Federal Communications Commission, which was set to send the deal to an administrative law hearing. Both agencies found the combination of the nation's No. 2 and No. 4 wireless companies would stifle competition, harm consumers, and raise prices.

"Consumers won today," said Sharis Pozen, the DOJ's acting assistant attorney general for the antitrust division. "Had AT&T acquired T-Mobile, consumers in the wireless marketplace would have faced higher prices and reduced innovation. We sued to protect consumers who rely on competition in this important industry. With the parties' abandonment, we achieved that result," Pozen said in a statement.

In a statement announcing its decision, AT&T was defiant that the government should allow free markets to operate in order to meet growing demand from consumers for wireless services. "Adding capacity to meet these needs will require policy makers to do two things. First, in the near term, they should allow free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC. Second, policymakers should enact legislation to meet our nation's longer-term spectrum needs," said Randall Stephenson, AT&T's chairman and CEO.

Public interest groups, which also fought hard against the merger by marshalling consumers via petitions and online campaigns, were pleased.

"In this age of cynicism, it is important for the American people to see that Washington does not always go to the highest bidder. The Department of Justice and the Federal Communications Commission stood up to tremendous lobbying pressure as AT&T spent tens of millions of dollars trying to push this merger through," said Harold Feld, the legal director of Public Knowledge.